sanctions such appointment; and the case of Montgomerie v. Wauchope (s) is referred to in proof of that proposition. Nothing was decided in that case upon that point, but the Judges stated that such appointments were not inconsistent with the law of Scotland, and that a trustee appointed by his co-trustees was entitled to the usual remuneration of an agent or cashier. This is the real question, because it is not necessary to hold that the appointment is illegal in order to maintain the principle that the party who, having accepted the office of trustee, which, unless otherwise provided for by the trust, must be performed gratuitously, accepts another office inconsistent with that of trustee, shall not be permitted to derive any emolument out of the trust property in respect of such employment. That the office of trustee and of factor or cashier to the property are inconsistent cannot be disputed. If the execution of the trust requires such appointment, it becomes the duty of the trustee to exercise his discretion and judgment in the selection of the officers, and his vigilant superintendence of their proceedings when appointed; all which is lost to the trust when a trustee is appointed to the execution of those duties; therefore the Courts of Equity in England in such cases refuse to the trustee any remuneration which would come to others from the appointment; which produces the salutary effect of deterring trustees from making such appointments when not actually required, and, when such necessity exists, preserves to the trust the superintendence and control of the trustees over the officer they may appoint. I should be sorry to give any sanction to a contrary practice in Scotland. There can be no reason for any (s) Fac. Coll. June 4, 1822. 1841. HOME v. PRINGLE and HUNTER. 1841. HOME difference in the rule upon this subject in the two countries. The benefit of the rule as acted upon in England is not disputed; and as there is no decision to the contrary, there cannot be any reason for sancHUNTER. tioning a contrary rule in Scotland. v. PRINGLE and In the view I take of the present case, there will not be any necessity for expressing any further opinion upon that point. In England, the appointment of one of the trustees to act as receiver and manage the property, and collect the rents, would not per se make the other trustees responsible for his acts; but it would make the trustee so appointed the agent of the other trustees for those purposes, and render them responsible for his acts, so far as they would have been responsible for the acts and receipts of a stranger appointed to such office, but not otherwise: and in Scotland, where such appointments are treated with more indulgence, the consequences cannot be more stringent. It appears, indeed, from the cases of Sym v. Charles (t), Moffatt v. Robertson (u), Ainslie v. Cheape (x), and Blain v. Paterson (y), that the Court of Session have acted upon this principle. The first ground, therefore, upon which the Appellant seeks to fix Pringle and Hunter with the balance due from Molle, I think, wholly fails. But secondly, considering Molle as the agent and receiver of the other trustees, have they, in their transactions with him, been guilty of such negligence as to make them responsible for the acts of their agent? For I have not been able to follow the reasoning by which it seems to have been supposed that Mr. Pringle, by accepting the office of cashier, incurred any additional responsibility as to the acts or receipts of Mr. Molle. (t) 8 Shaw & D. 741. (x) 13 Shaw & D. 417. That office may, indeed, have afforded him opportunities of knowing the state of Mr. Molle's accounts, and have given him earlier notice of his malversations, and such knowledge and notice may be important in considering his liability, but such liability must attach to his office of trustee and not of cashier. The question then is, what is the case established against Mr. Pringle and Mr. Hunter of culpable negligence in dealing with their factor, Mr. Molle? The trust-deed directs that the trustees should settle accounts annually with their factors, and upon payment of what should be found due, exonerate and discharge them from their intromissions and management; and within six months of each clearance with the factors, make up their own accounts, and get them approved by an accountant. This seems to assume that the account, so as to be settled with the factor, was to include the whole of his receipts and payments up to the time of the settlement; but that is not possible. It is the usual course that such accounts should be made up to a certain time, and there must necessarily be a running account not included in any such statement. No doubt this affords the means to a factor of keeping a balance in hand which does not appear upon the face of his accounts: he may delay receiving a sum of money until after the time to which the accounts are made up, in order to keep down the apparent balance; but however dishonest such contrivances may be in the factor, they cannot impose any responsibility upon the trustees by whom he is employed, unless they are parties to, or cognisant of them and it is obvious that in the management of a considerable property, it is indispensably necessary to leave a certain balance in the hands of the manager to meet the current expenses. 1841. HOME v. PRINGLE and HUNTER. 1841. HOME D. PRINGLE and HUNTER. It appears accordingly, that in Mr. Molle's accounts from 1822, considerable balances were in his hands on the 31st of December of each year; but that in each of those years such balances were more than paid by the month of March or April in the following year, excepting the year 1827, in which the preceding balance was not exceeded by subsequent payments, till the month of September. It is true that in the interval he had received sums equal to, or exceeding his subsequent payments, so that his actual balance was not reduced; but of that the trustees had not necessarily the means of information. The balance to the 31st of December 1829, was 1,6341., which-was more than covered by subsequent payments by the 7th of April 1830. It appears, however, that the trustees, and particularly Mr. Pringle, were aware that Molle retained balances. in his hands beyond what they thought necessary or proper, and that his so doing was the subject of remonstrance in 1828, which led to the reduction of what was then due; and, in 1830, the correspondence proves that Mr. Pringle insisted upon the payment of the balance then in hand, which not being done, led to the recal of the factory granted to Mr. Molle, which was followed by an intimation of his bankruptcy on the following day, up to which time it does not appear that there was any ground for suspecting his solvency: and it is proved that, at the time of his appointment, he was in high credit. The profit which arises from the use of a balance is sufficient to account for the attempt to detain it, without attributing it to inability to pay. A passage in Mr. Pringle's letter of the 22d of September 1830, has been much relied upon as showing that he had been aware of Mr. Molle's bad circum stances in 1828. He says, speaking of a payment of 1,500l. received in 1828, "I own I am a good deal pleased that this was done, from whatever quarter it was procured." The meaning of this is very doubtful; it may mean that he doubted Mr. Molle's having means of his own to pay that 1,500l.; or it may mean, that it might have been paid out of subsequent receipts, so as not, in fact, to reduce the amount of balance due on the preceding December. It is much too slight a piece of evidence to support the case of Mr. Pringle's having at that time been so cognisant of Mr. Molle's difficulties as to have made it his duty to interpose for the purpose of preventing his receiving any further part of the property, and to institute legal proceedings for the purpose of compelling payment of the existing balance; the credit and supposed responsibility of Mr. Molle having been unsuspected until very shortly before his bankruptcy. I cannot, therefore, find in the evidence given any such proof of culpable negligence in the mode of dealing with the factor as would, according to the decisions in the Courts of Scotland, render a trustee liable for the losses sustained by his ultimate insolvency. The cases of Ainslie v. Cheape (z), and Cowan v. Crawford (a), are strong authorities upon this point. In 1829, the trustees finding their factor retaining balances in hand beyond what they thought proper, press him by every means short of legal proceedings, to keep down such balances; which course continues till December 1830, when, finding their efforts ineffectual, they recal his appointment, which produces his bankruptcy without any previous proof of his being insolvent. (z) 13 Shaw, 417. (a) 13 Fac. Coll. 628. 1841. HOME 0. PRINGLE and HUNTER. |